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Jim Geraghty of National Review and Greg Corombos of Radio America are amazed that more than 90 percent of House Democrats either opposed a resolution supporting Immigration and Customs Enforcement or refused to vote on it at all. They also grumble as deficit projections once again head north of a trillion dollars and the number of food stamp recipients remains stubbornly high in a strong economy. And they denounce Vladimir Putin’s proposal to allow U.S. investigators to interview the 12 Russians indicted for meddling in the 2016 elections in exchange for allowing the Russians to interview a former U.S. ambassador.
deficits
Good Family Leave Plan, GOP’s Reconciliation Surrender, GOP Mad Paul Tells Truth
Alexandra DeSanctis of National Review and Greg Corombos of Radio America cheer the family leave plan pushed by Sen. Marco Rubio and Ivanka Trump to allow parents to tap their future Social Security checks to cover the weeks surrounding the birth of a new baby in exchange for waiting extra weeks when they reach retirement. In addition, Alexandra rebuts the liberal insistence that family leave must be a whole new entitlement. They also slam Republicans for effectively surrendering the option to use budget reconciliation for the next two years as part of the horrific budget deal with Democrats. And they fire back at Republican lawmakers who spent Thursday trashing Sen. Rand Paul’s filibuster as a waste of time, when those GOP members are really just mad that Sen. Paul called them out for their blatant hypocrisy on deficit spending and not wanting to take a vote on restoring budget caps.
Brat: Senate ‘Scared of Shadow’ on Spending
Rep. Dave Brat, R-Virginia, is slamming Republican congressional leaders for caving to spending demands by Democrats in a two-year budget bill that he anticipates will spark trillion-dollar deficits as far as the eye can see while Republicans unilaterally surrender their greatest weapon for passing meaningful entitlement, welfare, or health care reforms.
On Wednesday, just one day before another government funding deadline, the Republican and Democratic leaders in the House and Senate announced an agreement to keep operations running for two years, but with a hefty price tag for the American taxpayers.
Republicans who favor the bill are celebrating the lifting of sequester spending caps on national defense. They also included language to repeal the Independent Payment Advisory Board, often referred to as “death panels” in the Affordable Care Act. And they contend there is money well spent on veterans programs, infrastructure, disaster relief, and opioid addition programs.
But Brat says everything is getting more money and the media’s estimate of $300 billion in new spending is actually low.
“It’s actually $400 billion now and wait til you see what policies get plowed into that $400 billion,” said Brat.
The congressman says the House of Representatives addressed appropriations last year, passing a budget that cut spending as well as 12 separate departmental spending bills. He says things fell apart once those bills got sent to the U.S. Senate.
“They failed. They failed on Obamacare. They failed on keeping their word to the American people on being fiscally responsible,” said Brat.
Earlier this week, the House passed a continuing resolution that boosted defense spending but left other levels unchanged.
“The House Freedom Caucus plussed up defense spending. The entire Republican Conference was in favor, plus up the military but nothing else. We were going to stay as a team on that call.
“Then leadership got together and went to the Senate. They need nine Democrats and it morphed into a Democrat bill in five minutes. They plussed it up to $300 billion. When you add in contingency funding, it’s $400 billion,” said Brat.
“When you’ve got (Senate Minority Leader Chuck) Schumer saying this is a great bipartisan bill, and Republicans are in charge of the House, the Senate, and the White House, you might have a problem on your hands,” said Brat, who points out the two-year deal allows the Senate to wash its hands of the issue until late next year.
“The Senate basically doesn’t even want to vote on a budget next year. They’re scared of their shadow,” he said.
Brat is generally positive on Speaker Paul Ryan’s leadership but is not impressed with his actions on this bill.
“We got backed into a trap, but still [Ryan’s] got to take the boxing gloves and put them on and go over their to (Senate Majority Leader) Mitch McConnell and say no,” said Brat.
Brat says there’s only one reason why a bill like this gets passed in the GOP-run Congress.
“None of this has to d with rational policy. No one’s in favor of a trillion dollar deficit and so it’s all politics. It’s people protecting their hide and their slot up here . Taking the ‘yes’ vote is the easy vote. Sure, yes, yes, yes to everything. Put it on the credit card and the kids will pay it off. You know, were $21 trillion in debt right now,” said Brat.
And that’s about to get much worse.
“We’re going to have over trillion dollar deficits as far as they eye can see. If you’re a Republican and you’re fine with that, then I don’t get it,” said Brat.
Not only that, the required payments on the interest for the national debt were tamped down in recent years since interest rates were next to nothing. Brat says the markets are facing volatility now because of inflation fears brought on by rising wages. He says the tab to preserve the government’s solvency will also be on the rise.
“That wage inflation set off a signal. Markets are rational and they say, ‘Oh oh, interest rates are going to bump up once wages bump up,'” said Brat.
“We’re going to have inflation, interest rates going up, and then we’ve got to pay off $21 trillion in debt at normal interest rates like three, four, five percent, That’s going to be hugely costly and the market has properly recognized that,” said Brat.
In addition to being awash in red ink, Brat is aghast that GOP leaders effectively handcuffed themselves from getting any major reforms done in the next two years.
“They deemed the budget and gave up our ability to do budget reconciliation again this year in the budget. It’s a huge deal. That’s how we tried to get rid of Obamacare and that’s how we passed the very successful tax cut.
“This year, we were going to work on welfare reform and maybe some mandatory spending programs because they’re a $100 trillion unfunded (liability). Now for some reason e just unilaterally disarmed and gave away our power,” said Brat.
The reconciliation tool allows legislation to pass with a simple majority rather than having to meet the 60-vote threshold to cut off debate. Republicans will now have to keep their entire conference together and pick up nine Democrats to pass any legislation.
Brat, who calls this bill “a Christmas tree on steroids,” is getting some blowback from critics who want to know why he is so upset at a bill boosting federal spending by $400 billion when he just voted in favor of a tax bill that adds $1.5 trillion to the debt over 10 years.
Brat says the explanation is simple.
“I did my Ph.d on economic growth and you’ve got to compete with the mainstream media that doesn’t know anything about economics. All you need is an additional 0.75 percent economic growth to pay for our tax cut,
So when you put together the regulatory relief we have and the tax cut bill itself. The bill itself won’t pay for all of it, but the economy is more than compensating for it. We’re only at one-and-a-half or two (percent growth), so if you get to 2.75 you’ve paid for it and the Fed of Atlanta has us growing at 5.4 next quarter,” said Brat.
He says this line of attack is proof positive that liberals are clueless on fiscal policy.
“The tax cut does pay or itself but government spending does not pay for itself. That’s Econ 101 and unfortunately I don’t think the Democrats took the class,” said Brat.
Space X Success, Big Spending Republicans, Pelosi on Race & Immigration
David French of National Review and Greg Corombos of Radio America pause to cheer the Falcon Heavy rocket launch by Space X this week and David hopes it sparks more aspirational innovation that our nation so sorely needs. They also grimace as Republican majorities are preparing to jack up spending significantly over the next couple of years, even though some positive elements are included in the budget bill. And they sigh as Nancy Pelosi uses part of her marathon floor speech on immigration policy to say her young grandson blew out his birthday candles and wished he could look like his friend from Guatemala.
Why is the U.S. Still Spending at Obama Levels?
As Congress approaches yet another government funding deadline, the U.S. government is still spending taxpayer dollars at Obama-era levels since lawmakers continue to kick the fiscal can down the road in perpetuity, and one leading economist says that inaction is triggering the return of trillion-dollar deficits that future generations will have to pay.
Vance Ginn is senior economist at the Texas Public Policy Foundation, where he also directs the foundation’s Center for American Prosperity. Ginn also shared his insights on recent stock market volatility and what it means for the nation’s overall economic health.
On Feb. 8, the short-term continuing resolution approved last month will expire, triggering another partial government shutdown unless another funding bill is approved. Right now, Democrats and President Trump are drawing competing lines in the sand over immigration policy.
As a result, no one is advocating actual changes in spending for the various department and obligations of the government. In essence, the U.S. is still operating at Obama-era spending levels more than a year into the Trump administration.
Congress and Trump have repeatedly avoided dealing with the issue by passing and signing continuing resolutions in April, September, December, and January. And there is no indication the next bill will be any different.
“What it seems like they’re doing is trying the same thing over and over again and expecting a different result. That’s the definition of insanity and that’s what we continue to have in D.C,” said Ginn.
“Congress hasn’t taken the opportunity here – and the multiple congresses before this – to restrain the growth of spending over time,” said Ginn, and he says political considerations are behind the failure to rein in spending.
And while Democrats are doing their best to gum up Republican efforts to trim the federal budget, Ginn says the bottom line is Republicans know cutting spending comes with political consequences, so they’re reluctant to do it.
“When you’re looking at the next election cycle, you want to get re-elected. So it makes it very difficult to make those tough choices to cut spending for interest groups that are there often with their hands out,” said Ginn.
Recently, Treasury Department officials announced deficits for Fiscal Year 2018 could approach $1 trillion. Most reaction has been quick to blame the recently approved tax cuts. Ginn says that is one factor but not the primary factor.
“The driver of deficits and debt is spending. We don’t have a revenue problem. We have a spending problem. We’ve got to get the spending under control as quickly as possible. This would be a great opportunity to do that,” said Ginn.
And he says deficits will continue to bury us until the big ticket items are dealt with.
“The president has put out some good ideas like rolling back some of the funds going to the EPA and some other areas, but we really have to have congressional action. This isn’t just going to take cuts to spending. At some point, it’s going to have to be reforms to entitlement programs to really bend the cost curve so we don’t have massive deficits and debt year after year after year,” said Ginn.
Ginn says every year that lawmakers dither on spending adds another pile to the bill facing our children and grandchildren.
“That means future generations are going to have to pay more in taxes. Currently the national debt is around $21 trillion. (This years projected deficit) would push it up to $22 trillion or $23 trillion. If you add in unfunded liabilities for Social Security and Medicare, we’re over $100 trillion in debt,” said Ginn.
Ginn says some states are modeling fiscal responsibility and that Congress could take a lesson from his state of Texas.
“When you look at the Texas model of low taxes, relatively less government spending and sensible regulation, what we’ve been able to do in Texas is pass conservative budgets that don’t increase by more than population growth plus inflation. Actually it’s been less than that.
“It would be great to see the day where Congress can do that. And that would help it to live within taxpayers’ means over time,” said Ginn.
Meanwhile, the past several days on Wall Street have investors reaching for the antacid. Before Tuesday’s gains, the markets saw the biggest losing streak in about two years. Ginn says the negative numbers approached the range of a typical correction, but figuring out why takes some work.
“Eighty percent of businesses have come in above expectations for earnings in the fourth quarter, so you would expect greater increases in the stock market as well. But there’s also anticipation of faster economic growth and higher inflation, and some of those things are starting to contribute to an increase in interest rates, which slows economic growth and reduces the money supply in circulation,” said Ginn.
But with the Federal Reserve edging interest rates up recently, why is inflation becoming a problem? Ginn sees two reasons.
“Part of that is from the economic growth potential from the tax cuts that were passed and people are already starting to see an increase in their pay. As they see an increase in pay, they like to spend more and that increases demand. Without the increase in supply – which I think we will see from increased production from businesses – that would increase inflation,” said Ginn.
But there’s another, very different reason inflation concerns are mounting.
“The Federal Reserve has increased the money supply quite dramatically over the last decade, from quantitative easing and everything else. So you’re seeing inflationary pressures from that monetary factor as well,” said Ginn.
The bottom line though, says Ginn, is that Americans should have confidence in the economy going forward.
“The fundamentals are strong. The last three quarters of last year averaged three percent growth. That’s the long-term growth rate of our economy over the last 100 years,” said Ginn, noting the number is significantly better than during the Obama years.
GOP Governors Look Strong, Big Deficits Coming Back, Memo Mania
Jim Geraghty of National Review and Greg Corombos of Radio America see decent prospects for Republicans governors in the 2018 midterms, as they are glad to see the ten most popular governors in the U.S. are all Republicans and that many of the GOP’s least popular governors are not running for re-election. They also groan as Treasury Department officials project nearly trillion dollar deficits returning this fiscal year. And they get dizzy trying to follow all the accusations and counter-attacks related to the House Intelligence Committee FISA memo, concluding that the more information that gets released the better – from all sides – so long as sources and methods are not compromised.
Late Night Activism, Trump Resists Gun Control, GOP Embraces Deficits
Jim Geraghty of Natonal Review and Greg Corombos of Radio America sigh as liberal late night comedians demand new gun control legislation while getting their facts wildly wrong. They also react to reports that President Trump does not appear likely to embrace gun control efforts in the wake of the horrific attack in Las Vegas that killed dozens and wounded hundreds. And they shake their heads as White House Budget Director Mick Mulvaney – a deficit hawk while in Congress – says he is embracing deficits as part of the emerging tax reform legislation.